Stocks soar on market 'witching' Dow rises 44 points in heavy trading

WALL STREET

NEW YORK -- U.S. stocks, catapulted by the "triple-witching" options and futures expiration, soared in the most active trading in more than three years. Some market indexes set records.

The Dow Jones industrial average leaped 44.04 to 3313.27, ending the week with a gain of 9.19 points. Computer-driven buy orders tied to the concurrent expiration of December stock options, stock-index futures and stock-index options contracts added 29 points to the Dow industrials, according to Birinyi Associates.

"At least one-third of today's trading was 100 percent related to the mechanical closing out of options and futures positions," said Philip Smyth, a market analyst at Birinyi Associates.

The Standard & Poor's 500 index soared 5.85 to a record 441.28, exceeding the previous high of 436.99 set on Dec. 8. The New York Stock Exchange Composite Index rose 2.96 to an all-time high of 242.08, surpassing the old high of 240.24, also reached on Dec. 8.

The NASDAQ Combined Composite Index jumped 2.83 to 661.29. Advancers surpassed decliners by 1,141 to 458 among common stocks on the New York Stock Exchange. The American Stock Exchange Market Value Index gained 1.61 to 392.03.

More than 362 million shares changed hands on the Big Board, the highest volume since 416.4 million shares were traded on Oct. 16, 1989, the Monday following the collapse of the UAL Corp. buyout.

Yesterday's turnover marked the sixth-highest in NYSE history and the highest of 1992. The previous record for this year was set on Jan. 16, when 336.42 million shares traded on the Big Board. Trading was exceptionally active at the beginning of the year as investors, watching interest rates tumble, poured bank deposits and other funds into the stock market.

While the options expiration spurred most of yesterday's advance, recent signs of recovery in the U.S. economy also buttressed investors' optimism. "There's generally a better feeling about where the economy is going," said Richard Meyer of Ladenburg, Thalmann & Co.

Beverages, health care, telephone and foods were up the most in the S & P 500.

Tucson Electric Power Co., International Business Machines Corp., Coca-Cola Co., American Telephone & Telegraph Co. and Ryan's Family Steak Houses Inc. were the five most actively traded stocks.

Tucson Electric rose 25 cents to $2.25, continuing to gain on the heels of a financial restructuring completed earlier this week.

IBM resumed sliding after Thursday's gain. The stock fell $1.625 to $51.375, its lowest level since 1981. IBM has been wracked by the company's announcement this week of plans for a $6 billion restructuring charge in the fourth quarter and the possibility of a dividend cut.

Kellogg Co. closed up 75 cents at $70.75. After the market closed, the company said it would restate earnings for the first three quarters of 1992 to reflect an accounting adjustment for post-retirement health-care benefits. The adjustment would require a charge of $1.13 a share.

Time Warner Inc. rose 12.5 cents to $28.875 after the Wall Street Journal said co-chief executive Gerald Levin was seeking to reshuffle the board of directors to reduce the power of members loyal to ailing Chairman Steve Ross.

Nike Inc. slipped 25 cents to $88.375 after the company reported second-quarter earnings of 98 cents a share, up from 80 cents a year ago.

Jostens plunged $3.75 to $26 on the company's projection for an earnings shortfall in the first half of fiscal 1993.

Epitope Inc. gained $1.625 to $20.50 before trading was halted in early afternoon amid a Food and Drug Administration panel review of its OraSure saliva device used to test for the virus that causes acquired immune deficiency syndrome.

FDA staff expressed concern that individuals would receive notification of positive test results before they were confirmed.

The problem, the FDA staff said, was complicated by lower test accuracy using OraSure, a device for testing saliva, not blood, as in conventional testing. AIDS activists and public health officials said, however, that the company's OraSure should receive FDA approval as a first-step screening process for detecting the HIV infection in humans.

Navistar International rose 12.5 cents to $2.25 after the company reached an agreement with United Auto Workers on health care and reduced its dividend.

American Oil & Gas dropped $1.375 to $11.875 on the company's projection for lower fourth-quarter earnings than the year-earlier period.